Glossar
Everything at a glance

The IZ Research Glossary offers definitions of structural and market data on IZ Research Cities. The glossary is currently under preparation and will be updated on an ongoing basis.
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Contents

1. Structural Data

The definitions of the structural data were taken from original sources, the Destatis glossary and the regional statistical data catalogue of the Federal and State governments (RegioStat), and are quoted below. We obtain some data, which the official statistics do not provide at municipality level, from our cooperation partner Nexiga GmbH, whose data definitions we also quote here.

1.1 Economics & Taxes

Gross Value Added Gross value added is calculated by deducting prepayments from production values; it therefore only includes the added value created in the production process. Gross value added is valued at production prices, i.e., without the taxes payable on the goods (goods taxes), but including subsidies on products received. (Source: Statistical Offices of the Federal Government and the Federal States 2019). The gross value added shown on IZ Research is shown both as a total amount in millions of euros and differentiated by economic sector. The economic sectors are classified by Nexiga GmbH on the basis of the Classification of Economic Activities. (Source: WZ 2008). Property Tax Property tax A is levied on the ownership of agricultural and forestry land. Property tax B is levied on the ownership of undeveloped and developed land. The amount of the revenue from this is essentially determined by the assessment rates, which each municipality can determine itself. (Source: Destatis 2020). Trade Tax The trade tax (also referred to as real or property tax) regulated in the Trade Tax Act is the most important source of revenue for the municipalities and thus belongs to the so-called municipal taxes. The tax assessment rate is set independently by the municipalities, thus the amount of tax to be paid differs from municipality to municipality. “The subject of trade tax is the business enterprise and its objective earning power (operating profit). Every trade business is subject to trade tax if it is operated in Germany. A trade is understood to be a commercial enterprise within the definition of income tax law. An activity which is to be regarded as the exercise of agriculture and forestry or as the exercise of a freelance profession or other self-employed work is not subject to trade tax. (Souce: Destatis 2020) Real Tax Real taxes include property tax and trade tax. For each type of real tax and for each municipality, the basic amount is calculated according to the following formula: Actual revenue / tax rate* 100 (Source: Destatis 2020) Real Tax Revenue The real tax revenue indicates how high the real tax revenue would have been in the individual municipalities if all municipalities had applied the national weighted average assessment rate for each of the individual real tax types. This is therefore a hypothetical value. (Source: Destatis 2020 and Thuringia Statistics, https://statistik.thueringen.de) Municipality share in income tax The municipalities receive a share of 15 per cent from the revenue of wage and income tax and, from 1993 onwards, twelve per cent from the interest deduction, which is divided among the municipalities according to a key (key figures). In general, the actual amounts are shown. Only for the purposes of the real tax comparison are the figures shown according to the final accounts. (Source: Destatis 2020 and Thuringia Statistics, https://statistik.thueringen.de) Municipality share in value-added tax Compensation introduced in 1998 for municipalities in the new German federal states that did not introduce the trade capital tax or which abolished the trade capital tax of 2.2 per cent of the revenue from value-added tax in the former federal territory. The amount due to the respective federal state is distributed among the municipalities by means of a key (key figures). In general, the actual amounts are shown. Only for the purposes of the real tax comparison are the figures shown according to the final accounts. (Source: Destatis 2020 and Thuringia Statistics, https://statistik.thueringen.de) Strength of revenue from taxes This is the strength of revenue from real taxes increased by the municipal shares in income tax and value-added tax and reduced by the trade tax allocation. (Source: Destatis 2020) Wage and income taxable persons “The taxable unit is the natural person with unlimited/restricted tax liability who is recorded and verified as a taxable person, namely:
  • as a single person (this also includes a child living in the parents’ household with their own income or married couples or persons in registered civil partnerships who are taxed separately)
  • as a married couple or persons in a registered civil partnership who are taxed jointly (a married couple/persons in a registered civil partnership = one taxpayer).”
(Source: Destatis 2020) Wage and income tax “Total tax revenue from wage and income tax. Employees and pensioners pay wage tax; self-employed persons pay income tax. Wage tax differs from income tax only in the way it is levied. The tax rate is basically the same”. (Source: Destatis 2020)  

1.2 Population & Households

Population Forecasts

Nexiga prepares a forecast of the population figures for each of the years 2025, 2030 and 2035, based on official data for regional population projections and forecasts of the Federal Statistical Office (source: Nexiga GmbH). For the population forecast, empirica regio uses a calibrated population forecast of the State Statistical Offices with the base year 2020 for all districts and independent cities and with a forecast horizon up to 2035. For this purpose, empirica regio has harmonised the existing state forecasts and the underlying assumptions on internal migration. The result is a lower, medium and high growth scenario. The empirica forecast for the year 2035 in the lower variant almost corresponds to the level of the 14th Coordinated Population Forecast Variant 1 (G2-L2-W1) and in the upper variant approximately to Variant 3 (G2-L2-W3). The regional distribution of inhabitants across the 400 districts, on the other hand, is based on the federal state projections in all years. (Source and further information on the methodology: empirica regio/ empirica housing market forecast 2022/2023) Households

Households Forecast

Empirica regio generates a households forecast based on the population forecast. After deducting subtenant households and adding the demand for second homes, this results in the number of households in demand for housing. The increase in the number of households requiring housing then describes the additional demand for housing caused by changes in the number of inhabitants, household sizes and the age distribution of households. The forecast of households as a whole is presented at municipality level. The household forecast, differentiated by 1, 2, 3 and more person households, is available at the district level as well as for the independent cities and is calculated as a lower, medium and high growth scenario. (Source and further information on methodology: empirica regio/ empirica housing market forecast 2022/23).
For the definition of office market data, IZ Research follows the guidelines for office market reporting (2015) from the gif (Gesellschaft für Immobilienwirtschaftliche Forschung e.V./ Association for Real Estate Economic Research), which is to be seen as a standard definition catalogue of office market indicators for the German real estate market. However, we would like to point out that depending on the data provider, the calculation basis of the market segment and/or the calculation method may differ from the gif definition. In this context, we refer in each case to the cited source.

2.1 Prime Rent

According to the definition of gif e.V., prime rent refers to achievable new rental contracts (not existing rental contracts). It is calculated on the basis of an achievable nominal rent (contractually agreed initial rent, not taking into account ancillary costs, incentives or local taxes) and relates to a high-quality rental area of at least 500 m² in size (300 m² in B locations) in the best submarket at the reporting date/period. It is reported in square metres of rental space according to the gif definition on a monthly basis in euros per square metre. In order to interpret the market situation in the upper price segment, the achieved prime rents can also be mapped. The achieved prime rent comprises the top price segment – in relation to the respective market area – with a market share of around 3% of the rental turnover (excluding owner-occupiers) in the past 3/6/9/12 months, depending on which period is to be considered, and represents the median of the rental prices of the corresponding reporting period. At least three contracts are to be included in the calculation, even if this means that the 3 % limit may be exceeded. The prime rent is intended to reflect the development in the prime segment of the market, even if no rental contracts were signed in the top price segment during the reporting period, i.e., it can be estimated on the basis of the achieved prime rent if no such contracts were signed during the reporting period. When publishing achievable prime rents, it should be noted that these may not be rent levels achieved on the market. (Source: https://www.gif-ev.de/gif-glossar/show/glossar-bueromarkt) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.2 Average Rent

The achieved average rent is the area-weighted average rent across all new rental contracts concluded in a defined (sub)market. To calculate the average rent, the individual nominal rents of all new rental contracts concluded in a defined period are weighted with the respective area rented and the average value is calculated from these values. The average is only formed if the contracts recorded with area and rent for the calculation represent at least 75 % of the take-up (excluding owner-occupiers) in a market. (Source: https://www.gif-ev.de/gif-glossar/show/glossar-bueromarkt) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.3 Rents Range

It describes the range between the lowest and the highest rent in a defined (sub)market and is based both on the rental contracts concluded in a period and on the market view of the local rental departments of the data providers. The upper end of the range is also the maximum rent (= individual values above the prime rents in non-reproducible areas are referred to as maximum values). (Source: https://www.gif-ev.de/gif-glossar/show/glossar-bueromarkt). Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.4 Prime Yield

The term yield in this context corresponds to the net initial yield and puts the net rental revenue in relation to the gross purchase price (= purchase price incl. incidental acquisition costs). It is an extension of the gross initial yield and is expressed as a percentage. The prime yield describes the value of a building of the highest quality, usually a new building, in a prime location (usually in a central city location), if the building is fully rented to top tenants on a long-term basis at the current prime rent. (Source: https://www.gif-ev.de/gif-glossar/show/glossar). Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.5 Vacancy

According to gif e.V., vacancy is the sum of all office space that is available for letting, subletting or sale (for the purpose of continued use) at the time of the survey and may be ready for occupancy within three months. In addition, office space that is still under construction and may be ready for occupancy within three months is taken into account. Unused space for which only a general rental contract has been concluded is also included in the vacancy rate. This is office space that is available at short notice. A further distinction is made between the so-called structural vacancy, which includes all office space that has been vacant for at least three years. The allocation to vacant structural space is independent of the age, equipment and location of a building and includes both individual floors/areas of an otherwise occupied property as well as entire buildings. The base vacancy is a subset of the office vacancy of a market. As such, it can also be reported separately in market reports. (Source: https://www.gif-ev.de/glossar) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.6 Vacancy Rate

The vacancy rate represents the percentage ratio of all vacant space in a unit (property, city, region, etc.) to the total office space currently available. The rate can thus refer to an entire city, a region or the whole of Germany. Here the vacancy rate for a specific point in time refers to a specific market sector (city and/or sub-sector). (Source: https://www.gif-ev.de/glossar) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.7 Space under Construction

Office space under construction includes space that is currently in the development phase (from the start of ground works). Pre-marketed rates can be shown for such space as part of market reporting (these also include space that may be ready for occupation within three months). All space that is under construction but may be ready for occupation within the next three months already counts as office space supply and, if not rented out, is also included in the vacancy rate. (Source: https://www.gif-ev.de/glossar) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.8 Construction Completions

Construction completions are defined as the completions of the office construction measures defined under building permits. Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

2.9 Take-up

Take-up is the sum of all space newly rented, sold to owner-occupiers or constructed by owner-occupiers for themselves in a defined (sub)market for office properties within a certain time period. For the recording of rental revenue, the date of the conclusion of the contract applies, even if this is conditional, if applicable, and is not the tenant’s move-in date. It does not matter whether the space is ready for occupancy or first has to be developed or constructed. This also applies to any condition’s precedent stated in the contract. For the recording of owner-occupied space, the date of conclusion of the contract applies, provided it is the purchase of an existing office building or one under construction. In the case of project developments for own use, the actual start of construction is decisive for the definition of take-up (start of ground work). Special features which apply to the definition of take-up: For take-up, (sub)rentals within principal rental agreements or owner-occupied properties are also to be included. Interim rentals count as take-up. Rental contract extensions are only recorded as take-up if the rented office space is larger than the space previously used. In this case, only the renting of the additional rental space is taken into account as take-up. In the case of relocations within a building, only the additional rented space is counted as take-up. The following circumstances are not counted as take-up: Beyond the exceptions mentioned above, the extension or renewal of existing rental agreements is not counted as take-up. Also, in the case of refurbishments where the occupant(s) temporarily leave the building and return to the original building upon completion of the refurbishment, the return is not counted as take-up (but rather interim rentals) Take-up does not include space that was already rented by the new owner before the purchase, as well as sale and leaseback transactions. Likewise, general rental contracts are not recorded as take-up. Also, any bogus turnover that may arise for owner-occupiers/tenants as a result of restructuring, spin-offs, rebranding, etc. is not recorded as office take-up. However, extension or renewal of office rental contracts can be recorded and published as a separate category. (Source: https://www.gif-ev.de/glossar, Guidelines for office market reporting, gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Juli 2015) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.

3.1 Prime Rent

The prime rent in the retail sector describes the maximum sustainable nominal rent (net rental price excluding ancillary costs, incentives and local taxes) for new rental in a high-quality ideal retail space in a prime location. It is based on the evaluation of the rentals registered during a defined period (usually per quarter). (According to gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Definitions for Retail Analysis 2014) The respective ideal space as well as the spatial delimitation of a prime location is defined differently depending on the data provider. In this context, we refer in each case to the definition of the cited source.  

3.2 Prime Yield

Assuming specific incidental acquisition costs and non-apportionable management costs, the prime rent is calculated into a net initial yield (prime yield). (According to gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Definitions for Retail Analysis 2014)  

3.3 Purchase Price Factor

The factor of a retail property is calculated by dividing the purchase price by the annual net base rent i.e., rent excluding ancillary costs. (According to gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Definitions for Retail Analysis 2014)  

3.4 Take-up Retail

The retail space take-up describes the total of all newly rented spaces within the period under consideration (time of the conclusion of the rental contract) or market sector. Rental contract extensions are not recorded as take-up. (According to gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Definitions for Retail Analysis 2014) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.  

3.5 Pedestrian Footfall

Pedestrian frequencies reflect the number of people who are on foot in a shopping street on fixed reference days during a defined period and were recorded in the course of a census. As indicators of sales opportunities, frequency data are important indicators of sales opportunities, especially for retailers who rely on pedestrian traffic. (According to gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Definitions for Retail Analysis 2014) The surveys or collection methods are carried out or defined differently depending on the data provider. In this context, we recommend referring to the definition of the cited source in each case.  

3.6 Ratio of Chain Stores

The ratio of chain stores indicates how high the share of businesses belonging to chain stores is in the total number of retail businesses in a spatially defined area (e.g., a street, the city centre or a district). (According to gif Gesellschaft für Immobilienwirtschaftliche Forschung e. V., Definitions for Retail Analysis 2014) Depending on the data provider, the calculation basis of the market segment and/or the calculation method differ from the gif definition. In this context, we refer in each case to the definition of the cited source.  

3.7 Purchasing Power

Purchasing Power Purchasing power indicates the amount of goods and services that can be purchased with one monetary unit and represents disposable income. We depict purchasing power in total in € million, per inhabitant in €, as purchasing power per household in € and by household size. As an additional value, we provide the purchasing power index (GER = 100), which makes it possible to compare the purchasing power of a specific region with the national or international average. (Source Nexiga 2020) Retail-relevant purchasing power Of the total available purchasing power of a household or a person, only a part is spent in retail. In particular, expenditure on rent, mortgage interest, insurance, travel or services is not relevant when determining retail purchasing power, as such expenditure is not retail-related. (source gif e.V.) We map the total retail-relevant purchasing power in € million and per inhabitant in €. As an additional value, we provide the retail-relevant purchasing power index ( BRD = 100), which makes it possible to compare the retail-relevant purchasing power of a specific region with the national or international average. (Source Nexiga 2020) Retail Turnover Ratio In contrast to retail-relevant purchasing power, retail turnover ratio records the purchases made at the consumer’s place of purchase, as it measures the sales made in the local retail trade. The definition used for the calculation is the turnover achieved in stationary retail trade at retail prices. We show the turnover ratio in total in € million and per inhabitant in €. As an additional value we provide the turnover index (GER = 100), which makes it possible to compare the retail turnover ratio of a specific region with the national or international average. (Source Nexiga 2020) Purchasing Power Retention in Retail The relationship between retail turnover and retail-relevant purchasing power is used to calculate purchasing power retention. This identifies spatial units with an inflow or outflow of purchasing power. The resulting centrality index is shown as a per capita index (BRD = 100) and indicates the degree of attractiveness (“magnetic effect”) of a spatial unit for its surrounding area. (Source Nexiga 2020) Consumer Purchasing Power Consumer purchasing power describes the income of private households that remains for consumption purposes after deducting all regular payment obligations. We show the total consumer purchasing power in € million, per inhabitant in €, as consumer purchasing power per household in € and by household size. As an additional value, we provide the consumer purchasing power index (GER= 100), which makes it possible to compare this purchasing power factor of a specific region with the national or international average. (Source Nexiga 2020) Purchasing power for daily consumer goods We map the purchasing power for consumer goods in total in € million, per inhabitant in €, as purchasing power per household in € and by household size. As an additional value, we provide the purchasing power index (GER= 100), which makes it possible to compare the purchasing power of a specific region with the national or international average. (Source Nexiga 2020)

4.1 Tourism

Overnight Stays “This is the number of overnight stays by persons who stayed overnight in accommodation establishments during the calendar year, i.e., occupied sleeping accommodation for a temporary stay.” (Source: Statistical Offices of the Federal Government and the Federal States 2019) Guest Arrivals “This is the number of guests who arrived at accommodation establishments during the calendar year and occupied sleeping accommodation for a temporary stay.” (Source: Statistical Offices of the Federal Government and the Federal States 2019) Share of International Tourism Share of international guests in total guest arrivals in % (Source: Statistical Offices of the Federal Government and the Federal States 2019) Length of Stay The average length of stay is defined as the quotient of the number of overnight stays and the number of arrivals in the respective reporting period and is given in days. (Source: Statistical Offices of the Federal Government and the Federal States 2019) Tourism Index Number of guest beds per 1,000 inhabitants per municipality. (Source: Statistical Offices of the Federal Government and the Federal States 2019)

4.2 Hotel

Accommodation Establishments “Accommodation establishments which temporarily accommodate at least 10 guests (in tourist traffic) at the same time. This also includes accommodation establishments that provide accommodation for guests on a non-commercial basis and/or only as a secondary occupation. Accommodation establishments include hotels, hotels garnis, inns, guesthouses, recreation and holiday homes, educational accommodation, holiday homes and holiday flats, holiday centres, mountain huts, youth hostels and youth hostel-like establishments, campsites as well as preventive care and rehabilitation clinics.” (Source: Statistical Offices of the Federal Government and the Federal States 2019) Number of Guest Beds “Guest beds are the number of beds and other sleeping facilities offered in the accommodation establishments which are open (excluding campsites). The number of beds on offer refers to the accommodation facilities as they were at the end of July.” (Source: Statistical Offices of the Federal Government and the Federal States 2019)

4.3 Occupancy

The average occupancy rate or occupancy describes the proportion of rooms sold by an establishment in a given period and is expressed as a percentage and is calculated as follows: Occupancy = rooms sold/rooms available

4.4 RevPar

This is the revenue per available room in €, it is calculated as the quotient of the total room revenue to the number of available rooms.  

4.5 ADR

It is the average daily price per room sold, it is the quotient of the room revenue and the number of rooms sold per day.  

4.6 ARR

It is the average room rate for rooms sold in a given period and is the quotient of room revenue and the number of rooms sold.  

4.7 Prime Yield

Prime Yield The prime yield for hotel properties corresponds to the (gross) initial yield for properties of top quality and with top facilities. (Source Colliers International) Volume of Transactions The transaction volume is the sum of all registered hotel investments in a certain period and is stated in €.

Prime Rent

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. The data provider Jolas Consult calculates rent prices as medians of asking rent prices in sqm gross floor area (GFA). In addition to comparable property types and locations, comparable land values are also used. The median is derived from at least 5 comparable buildings with modern amenities. They are available for logistics and commercial properties at district level for independent cities. (Source: Jolas Consult)

Minimum Rent

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. The data provider Jolas Consult calculates rent prices as medians of asking rent prices in sqm GFA, using comparable property types and locations as well as comparable land values. The median is derived from at least 5 comparable buildings with basic amenities. They are available for logistics and commercial properties at district level for independent cities. (Source: Jolas Consult).

Average Rent

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. The data provider Jolas Consult calculates rent prices as medians of asking rent prices in sqm GFA, using comparable property types and locations as well as comparable land values. The median is derived from at least 5 comparable buildings with functional amenities. They are available for logistics and commercial properties at district level for independent cities. (Source: Jolas Consult).

Prime Yield

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. The term yield in this context corresponds to the reciprocal value of the net multiplier (total purchase price to annual rental income). The peak factor thus describes the highest multiplier achievable on the market and sets the net rental income in relation to the gross purchase price (= purchase price incl. incidental acquisition costs). As a rule, the prime refers to a new building (completed within the last two years) with the best location conditions and if the building is fully let to top tenants on a long-term basis at the current prime rent. (Source: DIP Deutsche Immobilien-Partner, among others).

Land Prices Min./Max.

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. As a rule, the land prices are based on so-called standard land values, which are the medians of all land values within the local authority in commercial and industrial areas. They are stated in €/sqm of floor space as both lower and upper price segments. The land values are not comparable with the standard land values.

Take-up

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. Take-up is the sum of all space let within the period under consideration. This also includes logistics space taken up by an owner-occupier. Take-up is usually expressed in square metres of gross floor area or floor space.

Volume of Transactions

The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail. In this context, we refer in each case to the definition from the cited source. Transactions describe buying and selling activities on the investment market for real estate used for warehousing, order processing and distribution of goods. The volume of transactions is the sum of the purchase prices paid per period in €.
The basis for calculating the market segment and/or the calculation method differ depending on the data provider or are not defined in more detail.  In this context, we refer in each case to the definition from the cited source.

6.1 Residential

Supply Housing Market The housing supply describes the number of all apartments existing in a regionally defined area on a certain reference date, both in residential and non-residential buildings. In residential buildings, the housing supply is again differentiated according to the type of construction, namely between the number of apartments in residential buildings with 1-2 apartments (apartments in detached and semi-detached houses) and the number of apartments in residential buildings with 3 and more apartments (apartments in a multi-storey building). The housing supply provides information on the size of the spatially and time-related housing supply (no information on whether it is occupied or unoccupied). (Source: Statistical Offices of the Federal Government and the Federal States 2019/ www.wohnungsmarktbeobachtung.de) Building Permits Building permits are understood to be “building measures requiring approval or consent, as well as those requiring disclosure or notification, or those subject to a permit exemption procedure”. This includes buildings and apartments. (Source: Statistical Offices of the Federal Government and the Federal States 2019) Construction Measures Construction measures describe all structural changes to existing residential and non-residential buildings through conversion, extension, expansion (e.g., annex or adding another storey) as well as restoration measures. In the case of construction measures on existing buildings, apartments may not only be newly created, but may also be eliminated (e.g., by merging apartments). Construction Completions Construction completions are understood to be the completions of “construction measures requiring approval or consent, as well as those requiring disclosure or notification or subject to an approval exemption procedure”. (Source: Statistical Offices of the Federal Government and the Federal States 2019) Residential Buildings “Residential buildings are buildings where at least half (measured by the share of living space in the total usable space) is used for residential purposes. Residential buildings also include residential homes.” These are shown in total and according to the number of apartments in the building. (Source: Statistical Offices of the Federal Government and the Federal States 2019) Non-residential Buildings “Non-residential buildings are buildings that are predominantly (more than half of the total usable floor space) used for non-residential purposes. These include, for example, institutional buildings, office and administrative buildings, agricultural and non-agricultural business buildings (e.g., factory buildings, hotels)”. (Source: Statistical Offices of the Federal Government and the Federal States 2019) Apartments “Apartments are defined as rooms which are adjoining one another and self-contained, intended for residential purposes and which allow for the running of a private household. In principle, an apartment has its own entrance which can be locked directly from the outside, from the staircase or from a hallway, as well as a water supply, sink and toilet. However, the apartment may also include basement or attic rooms that are located outside the actual apartment unit and that have been converted for residential purposes. Starting from reporting year 2012, “other apartment units” (i.e., apartment units without a kitchen or permanently installed cooking facilities) are also considered to be “apartments”.” Approved apartments are specified both in total and by number of rooms in the apartment (1 room to 3 rooms and more). Rooms are defined as all rooms intended for living purposes such as living rooms, dining rooms, bedrooms and other separate rooms (e.g., habitable basement and attic rooms) of at least 6 m² living area as well as self-contained kitchens regardless of their size. A living room with a dining area, bedroom or kitchenette is counted as one room. Bathroom, toilet, hallway and utility rooms are generally not counted. (Source: Statistical Offices of the Federal Government and the Federal States 2019) Usable Floor Space in Non-residential Buildings This refers to the part of the net floor space (excluding living space) that serves the purpose and use of the building. Accordingly, this includes the so-called main usable areas (office, production, storage, trade, teaching, culture as well as medical and nursing care) and the ancillary usable areas (sanitary rooms, cloakrooms, garages of all kinds, etc.), but not the construction, functional and transit areas. The usable floor space is given in 1,000 m². (Source: Statistical Offices of the Federal Government and the Federal States 2019)

6.2. Housing Demand

The housing demand forecast by empirica regio describes the additional demand for housing due to the increase in households demanding housing, caused by changes in the number of inhabitants, household sizes and the age distribution of households. The forecast does not take into account whether there is a shortage of apartments in certain price segments. Rather, it analyses how many additional dwellings are needed due to (regionally) increasing household numbers. In such forecasts, it is assumed that the dwellings will also be affordable (again) if sufficient numbers are built. The need for additional housing is forecast in number of dwellings as well as in number of dwellings per 1,000 inhabitants in a lower, middle and upper scenario for independent cities as well as for all districts until 2035. (Source and further information on methodology: empirica regio/ empirica housing market forecast 2022/23).  

6.3 Rents Overview

Apartments (average rent)

The rents are the asking rent prices (advertised rents) calculated by empirica regio hedonically, i.e., quality-adjusted, for a representative residential unit (apartment 60-79 sqm or detached house 125 sqm) for all years of construction and with high-end fittings. The rents are given in €/sqm/month (basic rent exclusive of utilities) and are available at district level and for all independent cities as quarterly values and are updated four times a year. In addition, the relative change in rents is shown as an index (Index Germany = 100). (Source: empirica regio). GEWOS obtains the listing data from the leading real estate portal Immoscout24 and calculates the median asking rent prices per m² for existing (built more than 3 years ago) and newly constructed apartments in the independent cities. (Source: GEWOS)

Affordability of Asking Rent Prices

The affordability of asking rent prices is the ratio of the average asking rent level per independent town or district in a given year to the disposable income of households per inhabitant. Disposable income is the income available to private households for consumption purposes and savings. An affordability of e.g., 33% means that 33% of disposable income has to be spent on (asking) rent. (Source: GEWOS)

6.4 Rents for New Constructions

Total Rents for New Constructions (average)

All new-construction rents are advertised rents (asking rent prices) and are presented by empirica regio hedonically, i.e., quality-adjusted for a representative residential unit (apartment 60-79 sqm/ detached house 125 sqm), with a construction year within the last ten years (new build) and with high-end fittings. They are given in €/sqm/month (basic rent exclusive of utilities) and are available at district level and for all independent cities as quarterly values. The data is updated four times a year. In addition, the relative change in rents is shown as an index (Index Germany = 100). (Source: empirica regio). GEWOS obtains the listing data from the leading real estate portal Immoscout24 and calculates the median asking rent prices per m² for newly constructed apartments in the independent cities. (Source: GEWOS)

6.5 Current Rents

Total Current Rents (Average) empirica regio defines the multiplier as the ratio of quality-adjusted rental and purchase prices per 60-79 sqm residential unit, for all years of construction and high-end fittings. It is calculated as follows: Purchase price/annual rent. empirica regio distinguishes between the multiplier overall, the multiplier for new housing construction (housing units not older than ten years) and the multiplier for the housing stock and is calculated nationwide at district level and for the independent cities. (Source: empirica regio) The multiplier from GEWOS indicates how many years it takes for the acquisition costs for a property to be recouped through rental income. A multiplier of e.g., 20.0 means that 20 years are needed to refinance the property purchase price through rental income. The multiplier was calculated for the second quarter of 2019. (Source: GEWOS)

Gross Initial Yield

empirica regio defines the gross initial yield as the ratio between initial rental income and purchase price of the rented apartment. Since very few of the apartments advertised for sale include the current rental income in addition to the purchase price, the mean, quality-adjusted rental price of all rented apartments is set here in relation to the mean, quality-adjusted purchase price of all owner-occupied apartments (cf. multiplier); the reciprocal value is the yield. empirica regio differentiates here between the gross yield overall, the gross yield for new housing construction (housing units not older than ten years) and the gross yield for the housing stock. It is given in % and calculated nationwide at the district level and for the independent cities. (Source: empirica regio) The gross initial yield calculated by GEWOS is the annual profit that can be generated with a property. The values given refer to rented apartments. (Source: GEWOS)

6.6 Purchase Price Overview

Owner-Occupied Apartments (average)

The purchase prices presented by empirica regio are quality-adjusted advertised asking prices (hedonic prices) for an apartment (60-79 sqm) or a house (detached 125 sqm) of all construction years (new and existing) and with high-end fittings. The purchase prices are given in €/sqm or per dwelling unit and are available at district level and for all independent cities as quarterly values. They are updated four times a year. In addition, the relative change in prices is shown as an index (Index Germany = 100). (Source: empirica regio). GEWOS obtains the listing data from the leading real estate portal Immoscout24 and calculates the median asking prices per m² for existing (built more than 3 years ago) and newly constructed apartments in the independent cities. (Source: GEWOS)   Housing Prices and Profitability Property prices and profitability are framework conditions that have a major influence on the investment decision. To map this sector, GEWOS has used the GEWOS Purchasing Power Property Price Index for owner-occupied apartments KPI, the affordability of asking rental prices and the current multiplier. The three factors flow equally into the assessment of property prices and profitability. (Source: GEWOS) Real Estate Price Index for Owner-Occupied Apartments (KPI) The GEWOS KPI represents the relation of the average available purchasing power per household and the average price for an owner-occupied apartment. (Source: GEWOS)  

6.8 New Construction Purchase Prices

New Construction Purchase Prices in Total (average)

The purchase prices for new construction presented by empirica regio are quality-adjusted advertised asking prices (hedonic prices) for an apartment (60-79 sqm) or a house (detached 125 sqm) built within the last ten years (new construction) and with high-end fittings. The purchase prices are given in €/sqm or per residential unit and are available at district level and for all independent cities as quarterly values. They are updated four times a year. In addition, the relative change in prices is shown as an index (Index Germany = 100). (Source: empirica regio). GEWOS obtains the listing data from the leading property portal Immoscout24 and calculates the median asking prices per m² for newly constructed apartments in the independent cities. (Source: GEWOS)

6.9 Current Purchase Prices

Current Purchase Price in Total (average)

The purchase prices for new buildings presented by empirica regio are quality-adjusted advertised asking prices (hedonic prices) for an apartment (60-79 sqm) or a house (detached 125 sqm) built more than ten years ago (stock) and with high-end fittings. The purchase prices are given in €/sqm or per residential unit and are available at district level and for all independent cities as quarterly values. They are updated four times a year. In addition, the relative change in prices is shown as an index (Index Germany = 100). (Source: empirica regio). GEWOS obtains the listing data from the leading property portal Immoscout24 and calculates the median asking prices per m² for existing properties (built more than 3 years ago) in the independent cities. (Source: GEWOS)

6.10 WohnInvestmentProspect (WIP)

WohnInvestmentProspect (WIP) The WohnInvestmentProspect (WIP) – a GEWOS product – offers analyses of investment opportunities and risks in residential real estate for all of Germany’s independent cities. Investment Opportunities Investment opportunities have been calculated in recent years according to the following factors: Ratio between housing supply and demand until 2030 Development of economic performance in recent years Change in affordability of rental and owner-occupied housing A maximum of 4 points can be achieved per individual factor, i.e., a total of 12 points. The scale from 0 to 12 indicates the following assessment: 0 = limited investment opportunities, 12 = excellent investment opportunities. (Source: GEWOS) Housing Market Balance For the regionalized housing market forecasts, the housing demand (households) up to 2030 is compared with the housing supply that continues into the year 2030, without taking into account new construction activity. The housing supply does not include holiday homes or residential home-type accommodation. An annual loss rate of 0.2% (demolitions and mergers of apartments) and a fluctuation reserve of 2% are assumed. The forecast only takes into account the demand relevant to the housing market and the corresponding supply. An annual loss rate of 0.2% (demolitions and mergers of apartments) and a fluctuation reserve of 2% are anticipated. The demand for new housing construction and the housing surpluses are calculated up to the year 2030 on the basis of population and household forecasts and a comparison with the housing supply in the initial year (as of 31 December in each case). The forecast is updated annually after the official population and housing supply data has been made available. The respective new building demand or housing surplus is made available in five-year steps. As a result, new construction needs or housing surpluses are shown as follows: 0 = high housing surplus, 4 = high level of new construction needs. (Source: GEWOS) The housing market balance is presented by GEWOS as a housing market balance (number of lacking apartments), as a relation housing market balance/current housing supply, as a housing market balance (new construction demand) and as a relation housing market balance/housing supply historically.

6.11 Vacancy

Accounting Vacancy Rate:

The accounting vacancy rate is calculated by empirica regio and represents the development of vacancies since the 2011 census on the basis of housing completions and population development as well as with the help of various assumptions and is forecast “backwards” accordingly. The principle of the calculation: Vacancies occur when supply is greater than demand. The supply increases due to new construction and decreases due to departures (demolition, consolidation or misuse/changes of use). Demand increases due to an increase in housing demand (more residents, decreasing household size/fewer shared apartments). “Housing demand is not an absolute (endogenous) figure: When vacancy rates are high, it increases because additional households are formed if sufficient space is available (e.g., children leave home earlier). When scarcity is high, it decreases because households move closer together (e.g., more shared apartments). The accounting forecast can only incompletely represent this iterative process of adjusting household sizes in response to housing market conditions. In borderline cases, therefore, an accounting vacancy rate of zero is shown. However, an accounting vacancy rate of zero does not exclude the existence of fluctuation reserves. After all, during many relocations, two apartment rents are sometimes paid at the same time because the old one has not yet been vacated and the new one not yet completely occupied.” The vacancy rate for accounting purposes is shown for all districts and independent cities, as total vacancy, for detached houses and for semi-detached houses, both in the number of vacant dwellings in total as the number of vacant dwellings per 1,000 inhabitants, as well as the rate in % and as an index (Index Germany = 100).

CBRE-empirica Vacancy Index

The CBRE-empirica Vacancy Index represents the so-called market-active vacancy rate in multi-storey apartments in Germany. The market-active vacancy rate does not take into account dysfunctional or structural vacancies. The residential units taken into account are immediately rentable or can be activated in the medium term. The figures for the total vacancy rate based on updated data from the last census are therefore higher than those for the accounting vacancy rate. The current figures of the CBRE-empirica vacancy index are based on management data from the real estate consultancy CBRE as well as extensive analyses and estimates based on the empirica regional database and the Federal Statistical Office. The CBRE-empirica Vacancy Index is formed as an index for all districts and independent cities. (Source: empirica regio).

Vacancy Forecast

empirica regio forecasts the accounting vacancy rate overall, for detached houses as well as for semi-detached houses (basic rent exclusive of utilities) in number of vacant dwellings and as a rate in each of three scenarios (lower, middle and upper scenario) as a time series until 2035 for all districts and independent cities (Source: empirica regio).

6.12 Construction Land Prices

The purchase values for land ready for construction for a residential development are presented by empirica regio on the basis of advertised asking prices hedonically, i.e., quality-adjusted. In this case, land available for construction on which construction work can begin means that there is a development plan and that a building permit is available. However, it does not mean that this land is already fully developed. The average purchase values for land ready for construction are presented in €/sqm area and as an index (Index Germany = 100) at district level and for all independent cities. (Source: empirica regio).